ISLAMABAD: The tax authorities have imposed tax on domestic electricity consumers – whose monthly bill is Rs25,000 and above.
According to a commentary on budget 2021/2022 by KPMG Taseer Hadi & Co. currently, tax collection on domestic consumers of electricity is prescribed under section 235A of Income Tax Ordinance, 2001 whereby 7.5 per cent advance tax is required to be collected if the monthly electricity bill is of Rs. 75,000 or more.
Such advance tax is adjustable against tax liability of such person. Whereas, tax collection on commercial and industrial consumer of electricity is prescribed under section 235 of the Income Tax Ordinance, 2001.
The Finance Bill 2021 proposed to withdraw section 235A and also proposes to insert requirement of tax collection on domestic consumers of electricity in section 235 based on following criteria:
—if the consumer’s name is not appearing in Active Taxpayers List (ATL);
—monthly bill is Rs. 25,000 or more;
—tax rate will be 7.5 per cent;
—tax collection on annual bill amount up to Rs360,000 will be minimum tax;
—tax collection on monthly bill over and above Rs. 30,000 will be adjustable against tax liability of a person.
The Bill further proposed to exclude those persons whose entire income is subject to final tax or minimum tax regime under any provisions of the Income Tax Ordinance, 2001 from the application of the above section.